13 July 2012 Last updated at 12:42 ET

Damian Green rejects claim higher migration boosts growth

Damian Green says OBR report does not present true picture

The Home Office has rejected claims by the government's financial watchdog that higher immigration levels could cut billions from Britain's deficit.

The Office for Budget Responsibility says the UK must make deeper cuts or raise more money to stay afloat.

Keeping immigration at current levels could ease the pain of austerity in the short term, it adds.

But immigration minister Damian Green said the OBR report "fails to take account of the costs of immigration."

"Uncontrolled migration places unacceptable pressure on the UK's public services, infrastructure and jobs market," he told BBC News.

"That's why we remain committed to bringing net migration back to sustainable levels - the tens of thousands not the hundreds of thousands."

The OBR, in its annual report, suggests that if levels stayed at or near their current levels of 260,000 there would be far more people of working age in the UK.

If annual migrant flows were cut to 140,000, the British population would reach 77.2 million and the working-age population would be 44.5 million, it says.

If immigration was cut to zero, the population would increase to 64.1 million and the working age population would fall to 41.4 million.

Higher immigration levels could raise growth rates over the next 50 years from 2.4% to 2.7% - meaning the government's austerity drive to bring down public debt would be less severe, the report suggests.

But it also says any economic boost may be lost when new arrivals get older and put pressure on the NHS and state pension.

"Higher net inward migration than in our central projection - closer to the levels we have seen in recent years, for example - would put downward pressure on borrowing and Public Sector Net Debt, as net immigrants are more likely to be of working age than the population in general.

"This effect would reverse over a longer time horizon, when those immigrants who remain in the UK reach old age."